Asian FX: Repricing risk as policymakers resist weakness – DBS

DBS Group Research economist Philip Wee argues that Asian currencies may face repricing risk as global policymakers increasingly resist competitive depreciation. He highlights US support for Japanese Yen stabilization as a signal to curb broader Asian currency weakness and notes European Union concerns over Chinese Yuan undervaluation. Wee concludes investors should focus more on Asian currency appreciation risks than further depreciation.

Focus shifts to appreciation risks

"For Asian currencies, however, the more important signal came from US Treasury Scott Bessent."

"He confirmed that Washington’s support for Japan’s efforts to stabilize the JPY from four-decade lows was also intended to prevent a wave of Asian currency depreciation."

"We are mindful that the European Union wants to press China over the CNY’s undervaluation as part of wider concerns about trade imbalances."

"Taken together, these developments reinforce the case for investors to pay closer attention to Asian currency appreciation than depreciation risks."

"With both the JPY and CNY under growing international scrutiny, global policymakers appear increasingly aligned in discouraging competitive currency weakness."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)